Low interest rates are the new norm
Low interest rates are set to become the new ‘normal’, according to the Bank of England’s Governor.
Mark Carney said that any increases would be at a gradual pace and limited rather than rising to pre-recession levels or even higher.
Most analysts expect interest rates to remain at their historic low of 0.5% until next year at the earliest.
Mr Carney told Parliament’s Treasury Committee: “Once rates begin to adjust, we expect for those adjustments to be at a gradual pace and to a limited extent.”
He added: “I do think there are a variety of factors that mean that the new normal, certainly over the policy horizon over the next three years, is substantially lower than it was previously.
“I see no scenario in which they would move towards historic levels.”
It is good news for homebuyers, investors and business as we continue to see economic growth.
New figures have also showed that the rate of UK Consumer Prices Index (CPI) – the main index used by economists – inflation fell to 0% in June, from 0.1% in May.
Falls in clothing and food prices were the main factors, the Office for National Statistics (ONS) said.
The rate of Retail Price Index (RPI) inflation – which includes housing costs such as mortgage interest payments and council tax – was 1% in June, unchanged from May.
With wages rising, it means there should be more money in the public’s pocket although an extended period of low inflation may hamper growth in the long term.
We’ve experienced a busy spring and summer so far – for our surveys as well as property-related services and architectural design services.
The recent Budget, following the general election, has created stability and confidence in business and the public.
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You can also visit the BBC website’s dedicated business section for more about the latest economic developments at http://www.bbc.co.uk/news/business/economy
Low interest rates are set to become the new ‘normal’, according to the Bank of England’s Governor. Mark Carney said…